The New Mexico Court of Appeals addressed the issue of an insured’s rejection of uninsured and underinsured insurance coverage in the case of Arias v. Phoenix Indemnity. The Court ruled that to be valid, a signed rejection of uninsured and underinsured coverage on an auto insurance policy must be attached to the policy itself.
The Arias v. Phoenix Indemnity involved a situation where the Plaintiff/Insured had signed a rejection as part of the original application procedure. In fact, a copy of the signed rejection was given to her along with the application for insurance. However, the signed rejection of uninsured and underinsured coverage was not attached to the policy. The Court found this to be fatal to the enforcement of the rejection of uninsured and underinsured coverage.
Uninsured and Underinsured Insurance coverage is often the only protection a driver will have in the case of an accident. Sadly, many New Mexico drivers are either uninsured, or carry minimal policy limits so that they are effectively underinsured. The result is that an injured driver will often have no recourse against the other driver since a driver with no or little insurance probably has few assets as well. Without uninsured and underinsured coverage, the injured person faces financial disaster as a result of their injuries, medical expenses and lost income.
There is a long standing public policy in New Mexico for the protection of the public against the hazards of uninsured and underinsured motorists. This policy was set forth early in Romero v. Dairyland. The Court in Romero flatly stated that the rejection of uninsured and underinsured coverage defeats this important public policy against exposing the public to the harms of uninsured and underinsured drivers.
Thus the decision in Arias v. Phoenix Indemnity simply promotes the long standing public policies set forth in Romero v. Dairyland. The rejection of this coverage is so important and potentially devastating to the insured that the rejection must be made a part of the policy itself. The insured must understand, or at least have the opportunity to understand the consequences of what is certain to be a very unwise and expensive decision.
